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10 Cards in this Set
- Front
- Back
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Imperfect competition
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between perfect competiton and monopoly
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Oligopoly
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A market structure in which only a few sellers offer similar or identical products
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Monopolistic Competition
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A market structure in which many firms sell products that are similar but not identical
Attributes: Many Sellers--Many firms competing for the same group of customers Product Differentiation: Each firm produces a product that is at least slightly different form those of other firms. Thus, rather than being a price taker each firm faces a downward sloping demand curve Free Entry & Exit:Firms can enter or exit the market without restriction. Thus the number of firms adjust until economic profit =s 0 |
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There are 4 types of market structure:
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Monopoly (chp 15)
-Tap water -Cable TV Oligopoly (chp 16) -Tennis Balls -Cigarettes Monopolistic competition (chp 16) -Novels -Movies Perfect competition (chp 14) -wheat -milk |
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In the shortrun monopolistic competition and monopoly firms look very similar
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true
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2 main characteristics of the long-run equilibrium in a monopolistically competitive market
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1. As in a monopoly market, price exceeds marginal cost. This conclusion arises because profit maximization requires marginal revenue to equal marginal cost and because the downward sloping demand curve makes marginal revenue less than the price
2.As in a competitive market, price equals average total cost. This conclusion arises because free entry and exit drive economic profit to zero |
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Please review pg 351 now
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now
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A monopolistically competitive firm is characterized by 3 main attributes
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1. Many Firms
2.Differentiated Products 3.Free Entry |
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The equilibrium in a monopolistically competitive market differs from perfectly competitive market in 2 related ways
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1. Each firm in a monopolistically comp. market has excess capapcity (operates on the downward sloping portion of the average total cost curve, below the efficient scale quantity and above the efficient scale price)
2. Each firm charges a price ABOVE its marginal cost |
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Advertising & Brand names
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used by monopolistically comp. firms
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